For Sale By Owner (Ultimate Guide)

House in Houston that is listed for sale by owner.
Learn the pros, cons, and how-to when selling a house For Sale By Owner in this blog.

Are you considering selling your house yourself, commonly referred to as for sale by owner?

If so, there are some key things that you must know about to be able to sell your house.

This for-sale-by-owner (FSBO) guide will give you the information you need to be able to sell your house in a shorter amount of time, and for a better price!

Read on to learn about for sale by owner sales in this blog from the Brilliant Day Homes Team!


We Buy Houses (In Any Condition)

Call Us (713) 903-2582 or Fill Out This Form For Your FAIR Offer.
  • This field is for validation purposes and should be left unchanged.

For Sale By Owner Ultimate Tips

Before we discuss how to actually sell your house without a realtor, I want to share with you some of the pros and cons of this method.

Pros And Cons To FSBO

Pros and cons of selling for sale by owner.

Pros

  • No Agent Commissions
  • You Have Control of The Process
  • Negotiation Ability

Cons

  • Need To Know Contracts
  • Must Understand Legality
  • Required To Do More Work

The number one reason I see people want to do for-sale-by-owner is to save realtor commission costs. It is common knowledge that you should be expected to pay 6% of the sale price of your house to the real estate agents. For perspective, that would mean that selling a $250,000 house, $15,000 of your sale price comes right off the top. It’s no wonder that many people consider an alternative.

The truth is that in many cases a bad real estate agent can actually hurt you more so than help you. We come across people all the time that their house sat on the market for months and never sold, and their agent was just doing them a favor as friend, or was new and had a part time side-hustle.

This article goes pretty in-depth into what you need to know about selling your house without using a real estate agent. Make sure to read all of it if you want to master selling your house FSBO.

How Do You Do A For Sale By Owner?

In order to sell your house you MUST understand these 4 subjects:

  • Market Research
  • Marketing
  • Real Estate Contracts
  • Negotiation

1. Market Research

Person conducting research on real estate in houston market to sell their house.

Market research is really just determining what the value of your house is and how long it should take to sell it.

Understanding the market, and the true value of your house is critical when doing for sale by owner – this is something that can’t be emphasized enough. If you don’t know what your house is actually worth, then you are going to have a very hard time selling it for a price you are happy with. The truth is that most homeowners incorrectly overvalue their house.

There is only one way to determine the actual market value of your house, and no, it is not by going to Zillow and looking at the notoriously inaccurate Zestimate. The way to actually value your house is by doing what is called a comparative market analysis, or CMA.

 Comparative Market Analysis

There are a number of ways that you can run a CMA for your house although I am going to discuss the most commonly used, and probably the best.

The first, and one of the best is using the multiple listing service, or MLS.

comparative market analysis of house in Houston.

Multiple Listing Service

The MLS is a database that has a vast amount of historical data of real estate information. The catch, is that you need to be a licensed real estate agent, or work with one to be able to gain access to the tool.

TIP: Reach out to people in your network, or your circle of friends that are real estate agents, and ask them if anyone would be willing to run a CMA for them. Although, please be honest and upfront with them if your intention is not to use them as your agent.

Zillow

If you don’t have access to the MLS, and don’t want to reach out to an agent to run a CMA for you, another option would be to use Zillow. Zillow actually pulls in data from public records, so it is accurate in terms of what houses have sold for. The issue where people go wrong with Zillow is by using the Zestimate. This is from an algorithm that doesn’t take into account the condition of the property. It looks at sold properties in the area and automatically adjusts the values based on the square footage and bedroom/bathrooms with a few other metrics and gives your home the value.

Ugly house in houston, that won't sell retail.
house in houston that can sell for retail pricing

If the houses pictured were neighbors, the Zestimate would value you them almost identically with only variations based on square footage and room count.

How To Do A CMA Analysis

Look at “Sold” – What you want to do is only look at only houses that have already sold. Houses that are for sale, or are pending, do not have the final sales price. The final sales price can be drastically different from the listing price due to negotiations on things like repairs.

Go Back 6 Months – Only look at houses that have sold in the last 6 months. If you absolutely can’t find anything, you can go back to 12 months. Real estate pricing can change rather quickly, so a house could drastically change value over the course of a year.

Use Price Per Square Foot – The best way to compare properties is by looking at the square footage. It is unlikely you will find the exact same house that recently sold. Instead you can compare houses with different square footage and make adjustment based on this.

Caution: There comes a point where the price per square foot will not be directly comparable. If you are selling a house that is 1,100 square feet, you likely won’t be able to compare the price per square foot to a 4,100 square foot house.

Make Adjustments – There are certain things related to the house that will either increase or decrease the value when compared to another.

  • Examples:
    • Is your house close to a major road? – having to pull out of your driveway into traffic, or having a front yard that is dangerous for kids to play in will devalue the property.
    • Does your house have a pool? – a pool can increase the value of your house, but will decrease the total amount of people that are interested in it.
    • Is your house next to a business? – a bar beside the house, or a commercial business behind it will devalue your house
    • Is your house in a flood zone? – this will typically devalue your house since it will be required to get flood insurance, and will turn off some buyers.
    • Has your house flooded before? – the more times your house has flooded the worse off the value will be. If it was flooded in something like hurricane Harvey, then the hit will likely be minimal. If it was one of the houses that flooded 3 years in a row, that is going to be an issue.
    • Is your house next to a vacant property? – sometimes this isn’t too bad if lawn is maintained. However, if the house has had a board order, and now has the doors and windows boarded up, that will devalue the house.
    • Is the garage attached? Have two spaces? – detached garages, single car garages, and carports are worth less than an attached 2-car garage.

To be comparable, the house should have the same bedrooms and bathroom count. If they are different, then there needs to be a price adjustment.

If that seems like too much work to do, don’t worry – you can pay someone to tell you the value of your house.

Pay For An Appraisal

real estate appraisal in houston

You can also hire an appraiser for a few hundred dollars to appraise your property. They will come to your house, see the inside, run the CMA and should give you a fairly accurate property price.

Caution: Appraisers aren’t perfect. The reason appraisers make mistakes is by misunderstanding your specific neighborhood. Basically, they could use the wrong properties to compare your house to. This happens sometimes, so make sure that you keep an eye on what houses are used, because real estate is very local and a house across the road could be valued completely different as it could be zoned to a different school district.

2. Marketing

marketing a house in Houston

The marketing is typically one of the reasons for sale by owner houses never sell, and are eventually listed. Marketing is really just getting enough of the right eyes on the property and making it desirable. Just sticking a sign out in your front yard is rarely going to get the job done.

Now before you start any of the actual marketing, you first need to spend some time to get the house in shape to be sold. You need to have any major issues fixed up ahead of time. Also you should do a deep clean on the entire house. If you don’t have much time, consider hiring a company to do so for a few hundred dollars. Things like steam cleaning carpets washing windows can make a big difference. Once the house is in great shape, now you can move on to getting it seen.

Make Sure People Can Find It.

You have 2 main options here:

  1. List the house on the MLS

You will have to pay a small fee (typically a quarter point) to a broker in order to get your house listed on the MLS. A quarter point would be 0.25%.

2. Post it on Zillow, Trulia, Realtor.com, etc.

There are a few ways you can do this, and one of them is to use companies out there that list FSBO.

Which For Sale By Owner Site Is The Best?

There are companies like For Sale By Owner.com and Houzeo that allow you to list it either on a lower package that just lists it on Zillow, Realtor, etc, or premium would be adding the in ability to list it on the MLS. There are other companies, but these are two that can serve what you need.

Have A Compelling Description

Take your time to craft a selling story about the house. Emphasize the great things about the home. Do some research looking at other listings that you like, and take elements from those.

Compare these descriptions below.

*Real descriptions on houses down the street from one another with similar pricing.

Good Description

Must see home in highly sought after Shepherd Park Plaza! Beautiful 4 bedroom, 3 bath home with a very flexible floorplan. In addition to the 4 spacious bedrooms & 3 full baths there is a downstairs office/playroom, upstairs game room, 2 additional offices/flex rooms, & a huge mudroom! No detail was missed! Features include new windows with custom blinds, PEX plumbing, Cat 6 wired (smart home), tankless water heater, updated electrical, durable Luxury Vinyl Plank flooring, recent HVAC with zoned A/C, custom paint, insulated attic for energy efficiency & updated designer fixtures throughout! The gorgeous kitchen offers a wonderful open layout with large island, quartzite counters, high-end appliances, soft close custom cabinetry, and great storage. First floor Master bedroom is a nice size with a reconfigured ensuite bathroom featuring his/hers sinks, an expanded shower, and private water closet. Picture perfect backyard with covered patio and sparkling POOL – perfect for entertaining!

Poor Description

****Solid Hickory Flooring Downstairs in Living Area*****Custom Inlaid Wood & Travertine Marble Florin the Dining, Study & Entry****Open Floorpan with Natural Lighting & Plantation Shutters****Marble Fireplace in Family Room & Master Bedroom****Honed Statuary Marble Kitchen Countertops****Inductive Cooking Range w/built-in Microwave****Saltwater Peebletec Pool, Pergola & Flagstone Decking****

As you can see, one of the descriptions actually has some detail and makes you feel something about the house. The other is just a check list and doesn’t inspire any emotion.

Take Excellent Photos

Hire a good photographer to take your photos. This is likely going to cost you a few hundred bucks. Please don’t skimp on these.

Pro Tip: If you aren’t sure who to use just look at a house in your neighborhood that you like the photos, and call the realtor of the listing. Ask them for their contact info. If you have higher end property, consider doing something like have a company shoot a drone video to get some attention.

Stage The House

Don’t take pictures of an empty house, or a house that has old furniture. This is the case with selling a house in general but even more so when doing for sale by owner. You are losing a lot by not property showing off the potential of the house. Professional staging can range anywhere from around a thousand to several thousand dollars depending on the size of the house and how much furniture and décor is needed.

Pro Tip: You can use a service like Box Brownie to have them digitally stage your house and touch up photos. This is incredibly affordable and in most cases no one will have any idea that the furniture isn’t real!

How To List The House

Now that you know what the value of your house is, don’t try to list it for more than it is worth. In fact you want to actually list it for LESS than what it is worth. This is a fantastic strategy to get lots of people interested and get a packed open house that will force multiple offers.

For Example, lets say your house is determined to be worth $350,000. A great price to list at would be $324,900. If all the similar houses in the neighborhood are going for $350K or more, then you end up with the best house at the best price. This will allow you to get into a highest and best bidding war that can actually sell your house for more than the $350,000. We discuss this more further down in negotiations.

Setting Up The Listing

Ideally you want the listing to go live Thursday morning on the MLS, so you want to post it Wednesday evening. Then you want to have your first open house scheduled for that Saturday. Make sure not to allow any showings of the house until the open house. Remember you want to have a house packed with people. It is really psychology, if they see a lot of people are showing up they will naturally feel the house is more valuable than it actually may be. This will likely get you multiple offers, don’t accept any of them

3. Negotiation

Negotiation during FSBO in Houston.

Highest And Best Offer

You want to go back to everyone that submitted an offer, and everyone that went through the house and tell them that there have been multiple offers on the house and that they should submit their highest and best offer. At this point, realtors will be telling their clients they are in a situation that they will likely have to bump up the price if they want the house. The realtor will know the house is worth $350 and will probably tell the clients if they really want the house they will probably have to come in above that. That is how you can end up selling your house for even more than it is worth by listing it for less.

4. Understanding the Contract

for sale by owner contract in houston texas

How Does For Sale By Owner Work?

Doing for sale by owner is actually pretty straightforward in terms of what it actually means. In a FSBO you are acting as an unrepresented seller of your property. There is nothing wrong in doing this, however you do need to understand there are laws associated with real estate that you could break. Things like not disclosing known defects on a seller disclosure could get you sued. Also, if you enter into contract with someone, you can’t just change your mind, you contractually obligated to sell, and breaking the contract could mean legal recourse.

If you are planning to do for sale by owner, it is important to understand the contract, the option period, the inspection and any addenda (additional contract material).

You can go to the Texas Real Estate Contract website to get a copy of the 1-4 residential contract that someone would be using to buy your house in Texas. Familiarize yourself with it, and if you have any questions we recommend reaching out to a licensed agent to discuss, or feel free to send us a note and we can help out.

Unfortunately there is so much here that it is impossible to be summed up in a single article. I recommend if you are unsure how to interpret a real estate contract to consult an agent or broker.

Here are a few tips though. If you have an older house expect things like lead paint, asbestos, old knob and tube electrical, cast iron plumbing to be issues with the inspection. The inspection will take place during the option period and will be used as a negotiation tool. Some buyers aren’t very picky with what they expect, others will want every single thing fixed.

Seller Disclosure

Texas law also requires you to disclose hidden material defects you are aware of.

Is For Sale By Owner Worth It?

This really depends on your specific situation, and what your goal is.

If you have the time to learn the above steps, are willing to put in the work, and are good at negotiation, then the answer is definately yes!

If you think something in here is too much work, or you don’t feel confident in some of the steps, then you could end up waiting a very long time to sell.

FSBO Alternatives

Hiring a Good Realtor

If you have a nice house and can wait a few months to sell, then a rock-star agent is definitely a good option. Just keep in mind, that all agents are not the same. In many cases a bad agent could actually make things more difficult for you by not doing their job correctly. I would recommend never using family or friends as your agent unless they are buying or selling at least 1 house per month and have been doing so for more than a year. A family member that just got their license and is willing to cut your a break on the commission rarely ever works out.

Sell To A Home Buying Company

If you don’t want the hassle of selling yourself, and you don’t want to wait months to sell, then a local home buyer like Brilliant Day Homes may be a good fit for you. Working with a local home buyer provides the benefit of not having to pay for repairs, and you can sell quickly. Reach out to us for a fast, fair, cash-offer.

We Buy Houses (In Any Condition)

Call Us (713) 903-2582 or Fill Out This Form For Your FAIR Offer.
  • This field is for validation purposes and should be left unchanged.
Kevin Bazazzadeh

Kevin is the co-owner of Brilliant Day Homes, and primary author of the Brilliant Day Blog. He uses the blog to help educate home owners on the details of real estate to help them make the best decisions with their biggest asset. Kevin grew up around real estate investing and spent summers working on rental properties for his dad, who runs a home renovation company with Kevin's brother. Kevin enjoys spending time with his wife Savannah, and children Isaac and Amelia. He also has a passion for volunteering and usually spends several hours each week doing so.

Leave a Reply

Your email address will not be published. Required fields are marked *